Good News Ahead for Utility Users

California has electrical rates 50% higher than most other states. An investigation by the California Public Utilities Commission in 1995-96 and the passage of AB1890 by the Legislature has set in motion the deregulation of the electrical industry in California.

The present plants built in the 1940s and early 1950s and the high costs of nuclear units are largely responsible for our high costs.

While deregulation will be painful in the short run, it will make basic industry more competitive in our state. Commercial and residential rates will eventually decline. While all users will receive a 10% rate reduction in 1998, this will be more than offset by the imposition of a block of charges calculated to cover “stranded assets.” These are the charges for unabsorbed depreciation and other charges that remain on the utility company’s books and must be settled with the consumer as a trade-off to deregulation.

Once these costs have been paid for by all classes of users, California will reorient the power industry by creating competition in production and the right to purchase electricity both in and out of state on a spot market exchange with dispatchers attuned to the availability of cheaper product elsewhere on the Western Grid.

Consumer groups such as residential users throughout Orange County can combine to negotiate with new or distant producers for a lower basic contract rate supplemented by less expensive power from the spot market.

Our thanks go to all who labored long and hard to achieve this aim. Consumers can look for interesting times ahead.

C. EDWARD WOLFE

President, Senior Utility

Ratepayers of California

Newport Beach